Silver sharply advances towards $24.30s

Silver rallied sharply, more than 1.60%, as liquidity conditions improved on Tuesday. The stronger US dollar was no excuse for the Silver Index to print solid gains, bolstered by falling US bond yields.

Falling US Treasury yields underpinned the white metal. Wall Street is expected to enjoy a higher open, even though China’s PMIs showed factory activity eased, and its reopening improved traders’ mood. At the time of writing, the XAG/USD is trading at $24.35 per ounce.

The market sentiment is positive, as shown by US equity futures pointing for a higher open. Over the weekend release of China’s PMI showed that manufacturing activity slowed down amidst COVID-19 lockdowns imposed in December. However, the relaxation of China’s zero-tolerance policy was cheered by investors at the beginning of 2023.

In the meantime, the US Dollar Index is recording solid gains of 0.81%, up at 104.326, failing to weigh on precious metal prices. US Treasury bond yields began the year on the back foot, as the 10-year benchmark note is tumbling eight and a half bps to 3.746%, as traders started to re-price a dovish Fed in 2023.

Another factor weighing on precious metals prices is the fall of US Real Yields, as shown by the US 10-year TIPS bond yield, plunging 12 bps, down at 1.471%, compared to last week’s close of 1.473%. This rewards holders of non-yielding Gold and Silver.